Eight years ago, Ms. Chhuon Oeun embarked on her journey as a jasmine trader with a modest starting capital of just KHR 2.4 million (USD 550). She rented a 540-square-meter jasmine farm on the outskirts of Phnom Penh, Cambodia, to harvest and resell the fragrant flowers. As jasmine farm rent rose and her ambitions blossomed, Ms. Chhuon sought support from microfinance institutions (MFIs). Starting with a KHR 2 million (USD 500) loan, she strategically increased her borrowing to KHR 6 million (USD 1500) by 2023.
“With this capital, plus my savings, I expanded my jasmine plantation to 2 plots, totaling 1,200 square meters, for nearly $2,000 in rent”, she explains. Her dedication is rewarded daily. With proper care, her jasmine fields yield up to 30kg of flowers at their peak. She sells them to a middleman for KHR 20,000 riel per kilogram. During peak demand seasons like Water Festival and Chinese New Year, the price skyrockets to a staggering KHR 100,000 (USD 25) per kg, significantly boosting her profits. However, she acknowledges the challenges of low-season prices, which can drop to as low as 1,000 KHR (USD 2.5) per kilogram. Additionally, she incurs the cost of hiring two workers to assist with the harvest, paying them up to 10,000 KHR (USD 2.5) per kilogram. After covering all production costs, the income from jasmine sale helps support the family's daily expenses, loan repayment and savings for emergencies such as illness, she explains. Regarding the loan repayment, Oeun prioritizes it. After each jasmine sale, she sets aside a portion specifically for MFI payments before allocating funds for her family. This approach ensures smooth repayments and builds trust with MFIs, facilitating future loans when needed. "We do not spend it until after we’ve allocated it," she explains, “For instance, if we earn KHR 2 to 3 million (USD 500 to USD 750) in one season, we allocate KHR 500,000 (USD 125) for the repayment. The rest is for our family’s spending. This way, we do not have to worry about the repayment”.
In addition to the loans for the jasmine farm, her husband also takes out loan from a MIF to fund his construction contracting business. Microfinance loans have become a lifeline for her family, providing much-needed support during challenging times, she added. “Loans have generated income for us and improved our standard of living”, Oeun explains, “We’ve been able to save money to purchase a small car and a motorbike for the family. We also own a house, providing us with a comfortable living”. Oeun's story is more than just jasmine. It's a testament to the transformative power of microfinance. It's a story of hard work, smart planning, and financial responsibility, all leading to a brighter future. She advised borrowers to avoid informal lenders altogether. While they may seem convenient, they often come with high interest rates and a greater risk of default. Her story represents the millions of Cambodians who have benefitted from microfinance. A recent independent impact assessment study conducted by an international research company, M-CRIL, with 3200+ microfinance clients from 10 provinces and 450+ villages in Cambodia, revealed that 58.6% of surveyed clients have access to microfinance, and 67% reported significant improvements in their lives. This highlights the positive impact microfinance has on poverty reduction, particularly for very poor households. As of the second quarter of 2024, the Cambodia’s microfinance sector provided USD 5.11 billion in loans distributed to 1.55 million customer accounts, according to Cambodia Microfinance Association (CMA)’s data. The National Bank of Cambodia's Supervision Report 2023 revealed that microfinance loans were provided to key sectors such as households (31.2%), agriculture (22%), trade and commerce (20.2%), services (11.4%) and other sectors (15.2%).
